Absolute Return Mutual Funds

Morningstar, which publishes mutual fund data, has 28 of them on its list, up from only a few several years ago.

Putnam Investments jumped into the ring in January, with four absolute-return funds for investors. Goldman Sachs started one last May, and the Natixis Funds launched its in October. The products are pitched at frightened people seeking Wall Street's holy grail: low-risk investments that can also provide attractive returns.

The average absolute return fund lost 13.2 percent over 1 year and 5.8 percent annually over 3 years, by Morningstar's count. In general, they've been less risky than stock funds, fulfilling their charter. But they don't produce positive returns in all kinds of markets, as some investors expected.You can search Morningstar and read more on these funds, but they tend to have high expense ratios and high minimum investments.

So, What is an Absolute Return Fund?

Absolute Return is similar to market neutral in the sense that they are both investment strategies undertaken that seeks to profit from both increasing and decreasing prices in a single markets. Absolute Return strategies can be achieved by taking long and short positions in different stocks to increase the return from making good stock picks and decreasing the return from broad market movements.

There are a few ETFs that utilize this methodology, and reading their investment prospectuses may give you a bit more insight into how they achieve their goals. Rydex, and others even offer mutual funds that utilize this strategy. ETFs and mutual funds are a much safer, and easier way, to gain access to this investment strategy than trying to get into a hedge fund.

Many investors feel commodity investments are a type of Absolute Return approach. But as we have all seen in 2008, that is certainly not the case. Though any investment can be used to achieve absolute return if it is done so in the proper context.

Welcome to Absolute Return Funds and Investments

Welcome to Absolute Return Funds and Investments. The financial press has written many articles about these investments lately due to the meltdown and losses in traditional assets. Not to mention the dwindling values of investor's 401k accounts and other retirement savings plans.

These type of investments can occur in many formats, and are offered my most sophisticated investment advisors. Check with yours to see his level of expertise.

Future posts to this blog will cover what an investor can expect with Absolute Return funds, be they through an ETF, mutual fund, hedge fund, or something else. They can be a great addition to any investment portfolio due to their diversification possibilities. These are quickly changing investments and for any financial professional or average investor it helps to have access to daily investments news to stay in front of any relevant industry developments.